AUD/USD: further weakness to come? – ANZ

By FXStreet FXStreet (Guatemala) – Daniel Been, analyst at ANZ explained AUD weakness is going to be far more extended, and in fact that we are at risk of a two standard deviation move down towards USD0.60.

Key Quotes:

“Overshoots are not uncommon for the AUD.

Previous instances when the AUD has overshot suggest that a reversal at this point in the cycle is unusual.

In those instances when we have seen a turn at thispoint it was at a time when the fundamental backdrop was becoming unambiguously favourable and where fair value was starting to trend higher.

The turning points have also come at a point where Australian assets were trading at a discount to global assets, they are currently still at a premium.

The overshoot is still justified by global circumstances and by the softer, more volatile growth outlook in particular.

Domestic and global circumstances suggest caution in trying to pre-emptively pick a positive turn in the global environment.”
For more information, read our latest forex news. …read more

Source:: FX Street